United States v. Dentsply Int'l, Inc. - 399 F.3d 181 (3d Cir. 2005)

Rule:

A violation of Section 2 consists of two elements: 1) possession of monopoly power and 2) maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

Facts:

Plaintiff, United States, alleged defendant artificial tooth manufacturer's dealer criterion, preventing its dealers from selling competitors' products, violated § 3 of the Clayton Act, 15 U.S.C.S. § 14, and § 1, 2, of the Sherman Act, 15 U.S.C.S. §§ 1, 2. The US District Court entered judgment for the defendant, Dentsply International, Inc. Plaintiff appealed and alleged that defendant, acted unlawfully to maintain a monopoly in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; it also entered into illegal restrictive dealing agreements prohibited by Section 3 of the Clayton Act, 15 U.S.C. § 14; and used unlawful agreements in restraint of interstate trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. After a bench trial, the District Court denied the injunctive relief sought by the Government and entered judgment for defendant. The District Court found that defendant’s business justification for Dealer Criterion 6 was pretextual and designed expressly to exclude its rivals from access to dealers. Accordingly, the Court concluded that plaintiff failed to establish violations of Section 3 of the Clayton Act and Sections 1 or 2 of the Sherman Act.

Issue:

Did the defendant’s exclusivity policy imposed on its dealers violates Section 2 of the Sherman Act? 

Answer:

Yes.

Conclusion:

In this antitrust case, the court concluded that an exclusivity policy imposed by a defendant-manufacturer on its dealers violated Section 2 of the Sherman Act. The court came to that position because of the nature of the relevant market and the established effectiveness of the restraint despite the lack of long-term contracts between the defendant and its dealers. Thus, the court reversed the judgment of the District Court in favor of the defendant and remanded the case with directions to grant the plaintiff’s request for injunctive relief.